Eight executives held over $8.5b asset-bloating casesTop News | Mandy Zheng 20 Nov 2020
Eight people - including several former senior executives of two listed companies, among them the brother-in-law of actor Natalis Chan Pak-cheung - have been arrested over alleged links to false accounting cases involving HK$8.5 billion.
Commercial Crime Bureau officers yesterday detained the six men and two women - aged between 53 and 73.
Three of them, including Paul Kan Man-lok, who was chairman of both Champion Technology Holdings and Kantone Holdings, were held on suspicion of conspiring to commit false accounting in a series of incidents.
They exaggerated the companies' assets in 2016, police said.
Hong Kong Exchanges and Clearing, the stock exchange operator, referred the cases to the CCB in December last year before publicly denouncing and criticizing the eight on April 27. It also accused them of violating listing rules and causing huge amounts of losses to the two companies.
In its April statement, HKEX denounced Paul Kan and Fred Lai Yat-kwong - both former executive directors of the two companies, and Paul Kan's brother Leo Kan Kin-leung - Champion's former executive director and Kantone's former non-executive director.
Paul Kan is also the brother-in-law of Natalis Chan, and is known for his expertise in computer technology and stock investment. Also, his love for collecting antiques has earned him the nickname "king of eaglewood." He founded Champion and Kantone in 1986.
HKEX also criticized Shirley Ha Suk-ling, Champion's former non-executive director and Kantone's former executive; Terry John Miller, Champion's former independent non-executive director; and Frank Bleackley, Champion and Kantone's former independent non-executive director. Others criticized were Champion's former independent non-executive director Lee Chi-wah and Kantone's former independent non-executive director Miranda Ho Mo-han.
"In HKEX's opinion, had Paul Kan, Leo Kan and Lai remained in office, [it] would have been prejudicial to the interests of investors," HKEX said.
It said Champion and Kantone had purchased 371 "cultural products," most of which were supposedly valuable Tianhuang stones, between November 2015 and June 2016. The firms stated in June 2016 that over HK$8.5 billion worth of such products were ready for trading, accounting for 92 percent of their total assets.
But the firms' boards failed to prove that these cultural products, including the stones, were professionally authenticated or appraised before they were bought, according to HKEX.
The two companies later had to hire two groups of experts to assess the products' value upon request of auditors.
After the assessment, auditors calculated that the firms suffered over HK$8.4 billion impairment losses in 2017 and 2018.